Deckers Outdoor ((DECK)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Deckers Outdoor’s recent earnings call painted a picture of robust growth and optimism, reflecting a strong performance in the third quarter. The company achieved record-breaking results, notably driven by the success of its UGG and HOKA brands. While challenges are anticipated in the upcoming fourth quarter, the overall sentiment remains positive, bolstered by increased guidance and international expansion efforts.
Record-Breaking Third Quarter Performance
Deckers reported its most successful quarter to date, with revenues soaring by 17% to reach $1.8 billion. The company also saw an improvement in gross margins to 60.3% and an increase in diluted earnings per share by 19% to $3. This impressive performance was largely propelled by the strong demand for its UGG and HOKA brands.
Strong Brand Performance and Growth
UGG’s global revenue climbed 16% to $1.2 billion, while HOKA’s revenue increased 24% to $531 million. Both brands maintained high levels of full-price sales, contributing to growth in both direct-to-consumer and wholesale channels, highlighting their strong market positions.
Increased Fiscal Year Revenue Outlook
The company has raised its fiscal year 2025 revenue outlook to just over $4.9 billion, representing approximately 15% growth. This marks the fifth consecutive year of mid-teens or higher growth, underscoring Deckers’ sustained upward trajectory.
International Market Expansion
Deckers’ international markets witnessed a 28% rise in revenue, indicating robust global demand and successful strategic expansion. This growth underscores the company’s ability to capture international opportunities for its brands.
Anticipated Fourth Quarter Challenges
Deckers anticipates challenges in the fourth quarter, including normalization of promotional activities and pressures from freight costs, which are expected to affect margins. Additionally, currency exchange rates are likely to pose headwinds.
UGG Inventory Limitations
Despite a strong year-to-date performance, UGG is facing inventory limitations for the fourth quarter, which could potentially hinder growth. This highlights a critical area for the company to address moving forward.
Sunsetting Koolaburra Brand
Deckers announced plans to phase out the Koolaburra brand, with a wind-down expected throughout 2025. This strategic decision is part of the company’s focus on optimizing its brand portfolio.
Forward-Looking Guidance
Deckers provided an optimistic outlook for the fiscal year, forecasting a 15% revenue growth, driven by UGG’s and HOKA’s strong performances. The company anticipates a full-year gross margin of approximately 57% and an operating margin around 22%, despite facing challenges such as freight costs and foreign currency fluctuations. Deckers remains committed to long-term brand health, with an emphasis on innovation and strategic marketplace management.
In summary, Deckers Outdoor’s earnings call highlighted a quarter of record-breaking success driven by strong brand performances and strategic international expansion. Despite anticipated challenges in the fourth quarter, the company remains optimistic about its growth prospects, supported by increased guidance and a focus on long-term brand health.
